But one thing that remains the same even decades later is the psychology behind receiving discounts. Customers love discounts, especially tiered discounts.
Discount makes them happier and keeps them coming back for more. The more personalized and targeted discounts you offer, the more your customers feel valued and appreciated, ultimately driving up the average order value (AOV) as they are incentivized to make larger purchases.
Offering tiered discounts is one such effective and psychology-backed discount strategy to increase brand loyalty, AOV, and overall sales. But what is tiered discount or tiered pricing in eCommerce?
A tiered discount is a pricing strategy where the discount offered increases as the customer buys more or spends more money.
How Does Tiered Pricing Work?
By implementing pricing tiers, you not only encourage repeat purchases but also motivate customers to spend more to unlock higher discount tiers.
It is pretty similar to leveling up in a game. You start with a lesser discount, but the more you spend, the greater discounts you get.
Forever 21's buy more save more promotion is is a perfect tiered pricing example where if you buy 2 sale items, you get 25% off; if you buy 3 sale items, you get 30% off; and if you buy 4 sale items, you get 35% off.
On one hand, this tiered pricing example benefits the buyers by providing them with greater savings while on the other hand, the seller gets increased average order value (AOV) and larger transactions.
For more details on how tiered pricing works to boost your store's AOV, read more here.
In short, customers are motivated to buy more items so that they get the most out of the discounts, resulting in higher overall sales for the brand.
Understanding the Psychological Drivers Behind Tiered Pricing Model
Those "spend more, save more" deals you often see in your inbox or during a store visit, aren't just a ‘good deal’. They're, in fact, clever strategies rooted in psychology that tap into a buyer’s natural tendencies and motivations.
At its core, tiered discount structure work by leveraging the human desire for progression and accomplishment. Clever price tiering give customers agency and a sense of control by allowing them to decide how much they want to spend to get better deals. It also makes them feel like they're getting a good deal tailored to their likes and preferences.
To design a tiered pricing strategy that effectively engage customers and foster loyalty, it is important for sellers to understand these psychological factors.
That’s why, with these tiered pricing examples, we are showing you how big brands use psychological levers to give discounts while increasing their AOV.
Top 6 Tiered Pricing Examples
1. H&M
One of the best Product tier examples in tiered pricing can be seen with H&M, the giant fast-fashion retailer, which is pretty smart and simple with its tiered discount structure
They simply want you to buy more to get bigger discounts. By offering increasing discounts as shoppers reach higher spending thresholds, H&M effectively incentivizes customers to add more items to their carts, ultimately boosting the average order value. H&M Tiered Discounts:
On spending $60, you get 15% Off
On spending $100, you get 20% Off
On spending $125, you get 25% Off
This simple three tier pricing helps H&M drive immediate sales and foster long-term customer loyalty. On top of it, the clear and straightforward nature of the discount structure simplifies decision-making for shoppers, improving their overall shopping experience.
Learn how to set up your e-commerce volume discounting structure.
Shein's tiered discounts are multifaceted. It aims to provide customers with both immediate savings and long-term benefits.
By offering tiered discount based on spending thresholds, Shein encourages buyers to increase their cart value in order to get higher savings.
Through the code US24J10, buyers get 10% off orders over $69, 15% off orders over $109, and 20% off orders over $189.
But Shein doesn't stop at just discounts.
They use the opportunity to offer additional perks through their loyalty program, Shein Club.
Exclusive 5% off on 100k+ items: Shein Club members get an additional discount on more than 100k products, which gives a sense of exclusivity and bigger savings.
12x Free Shipping Coupons: Members receive free shipping coupons to use throughout the year, making their online shopping experience both affordable and convenient.
3. Skechers
One of the tiered pricing examples that stands out is by Skechers.
Skechers' tiered discount structure may seem simple but is actually highly effective. They want you to find more things you love and fill up your carts so that you can get better discounts. Here’s how the offer works:
On buying 1 item, you save 10%.
On buying 2 items, you save 20%.
On buying 3 items, you save 25%.
Bonus for VIPs: If you're a VIP member, you get an extra 5% off.
As buyers add more shoes to their cart, they unlock progressively greater discounts, encouraging them to shop for additional products.
Skechers also rewards its VIP members with an exclusive benefit of an extra 5% discount on apparel purchases, increasing their savings and strengthening their relationship with the brand.
This tiered pricing model boosts sales and fosters repeat business and engagement with Skechers' loyalty program.
Bershka's tiered discount offer is super rewarding and straightforward. Whether you're buying two items or going for more, you're guaranteed to save money. Here’s how the discount works:
On buying 2 items, get 10% off each item.
On buying 3 or more items, get 15% off your entire purchase.
Plus, the discount is applied automatically when you check out.
Safe to say, Bershka's tiered discount strategy is one well-thought approach to boosting AOV while simultaneously enhancing customer satisfaction and loyalty.
5. Sephora
One of the best tiered pricing strategy examples is Sephora.
Their strategy is all about rewarding its most loyal customers with the biggest discounts. Plus, having a limited-time sale further incites FOMO among the buyers, driving impulse purchases, and enhancing customer engagement. In their Beauty Pass Sale, Sephora gives discounts based on membership level:
Gold and Black members get a 20% discount which is applicable from 2-6 September.
White members still get a nice 15% off which is applicable from 3-6 September.
By offering higher discounts to their top-tier members, this tier pricing example wisely encourages customers to reach higher membership tiers while cultivating a sense of exclusivity and appreciation among their most loyal customers.
With Kite, creating tiered discounts for your Shopify store is extremely simple and quick.
One of the best tiered pricing examples, Alexis Bittar's Buy More Save More event, is designed to encourage customers to spend more by offering increasingly attractive discounts as the purchase value rises:
Spend $100+: Get an extra 15% off with code SALE15.
Spend $300+: Enjoy a generous 20% discount with code SALE20.
Spend $500+: Reap maximum savings with 25% off using code SALE25.
This tiered discount not only increases the average order value (AOV) but also rewards customers for their higher spending.
The use of promo codes adds an interactive element to the promotion, further engaging customers and providing a sense of exclusivity.
Product tier examples like these highlight how brands use strategic pricing models to maximize both customer satisfaction and revenue growth
Ready to Launch Your Tiered Pricing Strategy?
If done right, tiered discounts are an effective way to increase your Average Order Value (AOV) and make customers your lifelong admirers.
At Skai Lama, we've helped countless brands worldwide achieve increased AOV, retention rates, a 5x return on investment (ROI), and overall success for your Shopify store.
Tiered Discounts Shopify
Wondering how to do tiered discounts on Shopify?
With Kite, a Shopify app for tier pricing, creating tiered discounts Shopify is extremely simple and quick.
Read how a Shopify Merchant was able to boost 28% AOV after creating tiered discounts with Kite here.
Kite is designed to automate enticing promotions like free gifts, tiered discounts, and buy-one-get-one offers, seamlessly integrating with Shopify stores to drive results. We've seen an average increase of 32% in AOV for Shopify stores.
To learn more about how Skai Lama can transform your Shopify store and maximize your profits, book a demo or check out our apps on the Shopify App Store today.
Hurrify customers to buy within a given timeframe with a sales countdown timer & improve conversions
Another popular Shopify checkout app is Checkout Promotions. The app comes with the ability to leverage a collection of highly robust visibility rules that help show customers one-click post purchase upsell promotions after an order payment has been made. Some of its key features include:
Features
AI recommended and manual recommendations for upselling.
Complete branding control.
Checkout Upsell for increasing AOV.
AI recommended and manual recommendations for upselling.
Pricing
Development
Free
Monthly Plan
$99/ month
Plus Plan
$99/ month
Plus Plan
$99/ month
FAQ
1. What is the difference between tiered and volume pricing?
2. How do tiered pricing models work?
3. What’s an example of tiered pricing in action?
4. Why are tiered discounts effective for increasing sales?
5. Does Shopify offer tiered pricing?
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Diksha P
Diksha leads Product Management at Skai Lama. She talks about discount campaigns, product recommendations, quizzes, and surveys to personalize Shopify stores.
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